Three economists have laid out in stark terms what the stakes are for the economy in the economic recovery debate now going on in the Senate—and brought home just how dangerous conservative obstructionist rhetoric really is.
“This cannot be allowed to fail,” Alan Blinder, economist at Princeton University, said during a conference call organized by Americans United for Change. He later added, when describing the state of the economy, “We’re falling without a parachute right now.”
Blinder likened the recovery package to laying mattresses under the economy to cushion its fall, and he warned against efforts in the Senate to cut the spending in the bill, such as one amendment by Sens. Ben Nelson, D-Neb., and Susan Collins, R-Maine, that cut spending by 25 percent. “It’s sort of playing with fire to trim the overall size of the bill by 20 to 30 percent,” he said.
Lawrence Chimerine, president of Radnor International Consulting Inc. and former chief economist of Chase Econometrics, said that the economic conditions he is seeing are “extremely scary and dangerous,” citing a series of “unprecedented” crises: the banking credit freeze and liquidity drought, a housing market glutted with 2 million unsold homes, and falling exports as the remainder of the globe falls into recession.
And Lawrence Mishel, chief economist at the Economic Policy Institute, warned that if the Senate failed to act boldly on a recovery package almost one in five Americans would be either unemployed or underemployed by next year. In the African-American community, the unemployment rate could reach 18 percent and the underemployment rate could reach 30 percent.
“All of this means lower wages and less income, so that this means that much has to be done, even more than what’s being discussed,” he said.
All three economists agreed that conservatives were dangerously wrong in arguing for dramatically less spending in the recovery package. Blinder said that while there is some room for compromise from the House-passed recovery bill on the type of spending and perhaps on tax cuts that would get more money into the hands of ordinary people, in the end “we simply need some version of this bill to pass.”
To fail to do that, Mishel said, would constitute “cruel and unusual punishment of the American people.”
Nonetheless, as these economists warn of the dangers of doing too little, senators in both parties appear hell-bent on heading in that very direction. This is where progressives have to change the political equation. Most economists agree that whatever the hazards of excess in kick-starting the economy, they pale in comparison to the consequences of not doing enough. The Senate needs to feel that same fear.